The US Federal Trade Commission (FTC) and more than 40 states have filed cases on Facebook. Mark Zuckerberg’s company is accused of ending competition. Those filing the case have appealed to divide the company into two parts.
However, US consumer advocates believe that the case against Facebook is weak. Experts say it will be very difficult for the FTC and state attorney journals to prove the charge. Because the antitrust law under which Facebook has been filed is very complex.
After all, what is the charge on Facebook? What does the company have to say about these allegations? How long can this case stretch? Why are these allegations being said to be politically motivated? Why would it be difficult to prove the charge?
What is the charge on Facebook?
- The biggest accusation on Facebook is that it bought social media platforms strategically that could challenge it in the future. For this, he bought the platform before paying more for it. For example, in 2012, Facebook bought Instagram for 5 thousand 332 crores. At that time there was no revenue from Instagram and it was a company of just 30 employees. Similarly, in 2014, the company bought WhatsApp for Rs 1.65 lakh crore.
- The FTC has also alleged in its complaint that Facebook bought small and new companies for the reason that Facebook can be more attractive to users and no other competitor stands.
What does the company say about the allegations?
Facebook says that it is currently reviewing the FTC and the states’ antitrust case. After the case was registered, Mark Zuckerberg issued a memo to the company’s employees, saying all the allegations were false. The memo also asks employees not to discuss openly the case.
Why are the allegations being said to be politically motivated?
- The Donald Trump administration is upset with several Silicon Valley companies. Even when impeachment was brought against Trump, many Republican lawmakers accused these companies of being biased.
- Facebook posted a disclaimer when Trump posted questioning the 2020 presidential elections to be fair. Even the Trump administration is said to be upset.
Why would it be difficult to prove the charge?
- Experts say that it would be difficult for case filers to prove that had Facebook not bought Instagram, WhatsApp, today’s social media market would have been better and consumers of the social media market would have been getting better services.
- Second, the regulators who had justified the merger of years ago would find it difficult to prove why they changed their minds. American Antitrust Institute President Diana Moss told the New York Times that it is going to be very difficult to prove the allegations with the kind of evidence in the case against Facebook.
What if the charges are proved?
- If the allegations on Facebook are proven, then the company will be split. A separate company combining Facebook separately and Instagram-WhatsApp. If these two profitable social media platforms get out of hand, the long-term value of Facebook will end.
- Dan Ives, the analyst at Wedbush Securities, says the breakdown of Facebook would be bad news for investors, as dividends had just begun to come after the merger.
- Facebook wants to become a veteran of e-commerce this year through Instagram and WhatsApp. Instagram earned one and a half lakh crores in 2019. This will stop Facebook’s revenue growth.